HP-Compaq: State of Confusion

By Peter Coffee  |  Posted 2001-09-10

The most appropriate icon for the proposed combination of Hewlett-Packard and Compaq might well be the Hindu god Shiva, multiarmed symbol of destruction and rebirth. With nearly parallel product lines, a combined HP-Compaq holds out in its many hands a potentially confusing variety of choices for enterprise IT buyers—who fear confusion almost as much as they fear the reaction of market competition.

HP and Compaq executives are clearly frustrated by the focus on personal computing products in most discussions of this deal. OK, well focus on high-end servers instead. Its the speed and capacity of servers and storage systems—not to mention their reliability, security and manageability—that enable new capabilities on public and internal networks. Thats where the growth and profit margins are likely to be found in the next wave of IT spending and where technical superiority can still be achieved outside the Wintel commodity umbrella.

Server strategies at HP and Compaq were already at critical junctures, even before the proposed merger. Both were migrating from established 64-bit processors (PA-RISC, Alpha and MIPS) to Intels unproven Itanium. HP must also manage inherited customers on Compaqs Tru64 Unix, OpenVMS and NonStop, as well as on its own HP-UX operating system.

Both Sun and IBM (despite IBMs own variety of platforms) offer calmer waters to IT buyers setting their course for Web services. Meanwhile, Dell Computer Corp. offers superior buying efficiencies for those seeking low- and midrange machines.

Products are merely the foundation of the kind of company that the new HP hopes to become. The high-value e-business services that HP hopes will rival IBMs portfolio must begin with robust application servers and middleware. HPs acquisition of Bluestone gives it the Total-e-Server product line—which won eWeeks 2001 eXcellence Award for E-commerce Infrastructure—while there may be actual synergy (hard to find in any other part of this deal) between HPs OpenView and Compaqs VersaStor in the management of large-scale storage architectures.

Finally, as Microsofts iron grip on Windows computing moves toward its final judgment in the retrial of the remedies for its monopoly-maintaining actions, the consequences of that control are apparent in HPs and Compaqs almost identical lineups of workstations, personal computers and portable machines. Without differentiation, there must be consolidation. The retail channel and personal computer buyers will pay the price in confusion and delays.

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